Soft first-quarter ad sales can be explained, in part, by the bang-up start to 2005 against which the magazine industry will be measuring the early months of `06. But the real problem, they say, was the ad-pages decline in August, September, October, November and probably December this year.
"The first half of 2005 was great," said one magazine executive. "The second half is an unmitigated disaster. If people are saying they're OK or soft [next quarter] that's good news, because the first half last year was so strong. On the other hand, if you say the most recent results are the most telling. ..." Well, let's just say this exec's outlook is decidedly pessimistic.
Ad pages, which increased 1.2% in the first three months of 2005, turned south with a 2.2% decline in August and haven't rebounded since, according to the Publishers Information Bureau. Pages in the apparel and accessories category, second only to automotive in volume, rose 3.6% during first-quarter 2005 but are down 0.8% for the year through November.
And the lead category, automotive, remains a full-year disaster scene: Car ad pages fell 2.6% during the first quarter and plummeted 6.3% through November.
If it is too early to fully map January, February and March ad sales, publishers and media buyers offered glimpses that help. "It just feels like we're off to a little bit slower start to 2006," said Stephen M. Lacy, president-chief operating officer, Meredith Corp., during his Dec. 6 presentation at the annual UBS Global Media Conference.
Part of the problem is ever-later planning by advertisers, Mr. Lacy said. "There was a time not that many years ago that around September, you had something approaching an upfront. Over the last decade, that's been pushed back." Now deal-making for the coming year is slipping later, even up to December.
Advertisers' growing demands for beyond-ROP solutions have also mucked up the gears, said William Kerr, chairman-CEO, Meredith. He said ad activity is as heavy as ever, but "the size and complexity of what's on the table complicates things for negotiators."
Michael D. Drexler, CEO, Optimedia U.S., said magazines will probably be flat or up a little bit next quarter, but agreed that many advertisers-and therefore media agencies like his-are moving slowly. "Most of the magazines that we would ordinarily have locked up by now for certain categories just haven't happened yet," he said. "In some cases advertisers have been slower in providing approvals because, I think, some advertisers are still reworking their marketing plans for next year. I also think that there's still a little skittishness about the economy."
As ever, certain categories are proving more lucrative than others. Domestic automotive advertising cratered this year and shows no sign of improving yet. Pharmaceutical advertising remains mixed, buoyed by new-product launches but constrained by the uncertain regulatory environment. Both high-end and "value" fashion advertisers are going strong, while those somewhere in between are struggling a bit. Technology advertising has suffered from consolidation in the sector, but each new gizmo requires a blast of consumer marketing.
Holiday retail spending will give advertisers something to go on-once it is complete. "Come Jan. 1, when many of us are closing our March issues, we generally see the spring ad budgets become more complete," said Michael A. Clinton, exec VP-chief marketing officer and publishing director, Hearst Magazines. At Hearst, January issues closed nearly flat compared with January 2005, while February was up, he said.
Conde Nast Publications' magazines, which have also closed January and February issues, are generally surpassing their strong first-quarter performances in 2005 so far, said Richard Beckman, president, the Conde Nast Media Group. "Anecdotally, I'm feeling quietly confident," he said. "If I could take my forecast today and write it in ink as opposed to pencil, I would be very happy."
Amid everything, publishers are trying to take measure of the heaving landscape. "We're almost in a month-by-month market," Mr. Clinton said. "The trend line that we really watch is annual-on-annual because there's so much back and forth during the course of the year. It's so much more of a volatile market."